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Senate in amendment mode on defense bill

Nov. 29, 2012 – NAFCU lobbyists said Wednesday that the Senate is still in the process of deciding what amendments to consider in conjunction with the defense authorization bill.

The underlying bill includes provisions that would:

revise the definition of consumer credit to include vehicle title loans and payday loans for any duration whether they are open-end or closed-end credit (the Department of Defense would retain its authority to include other products within the definition);

require DoD to issue policy on installment loans (DoD could place installment loans under the definition of consumer credit);

require DoD to consult with financial regulators when issuing regulations and once every two years thereafter; and

add civil liability to the list of penalties under the Military Lending Act, including actual damage, appropriate punitive damages and appropriate equitable or declaratory relief (provides safe harbor for bona fide errors).

The bill also includes a provision clarifying that servicemembers cannot be charged more than is allowed by state law for residents.

Sen. Jack Reed, D-R.I., has submitted an amendment that would expand on these provisions by giving the Consumer Financial Protection Bureau and state attorneys general enforcement authority over the civil liability section proposed for the underlying legislation. This would allow civil actions to be brought against financial institutions by the CFPB or state AGs, at their discretion, for violations.

The House passed its version of the defense authorization bill in May. The House version would, among other things, extend some Servicemembers Civil Relief Act protections to surviving spouses; extend post-service mortgage protections from nine months to 12 months; and require all financial institutions to designate an SCRA compliance officer.

The Senate is expected to continue work on the bill for the remainder of the week. NAFCU will be monitoring the legislation and voicing concerns about, and suggesting improvements for, provisions that affect credit unions.

Following passage of the Senate bill, the House and the Senate will resolve differences between the two bills in a conference committee.